Why DRM is a distraction

by Chris Walters of BookSprungThere are bigger problems in the ebook marketplace than individual piracy.You may not feel that way if you’re an author or publisher with a marketable title. And you may not feel that way if you’re a staunch consumer advocate, or if you worry about how DRM prevents ebooks from being future-proof.

But the underlying concern is that revenue is being lost; the topic of individual piracy and DRM is only a subset of that concern, and not even the best defined one. After all, we have no proof that most thwarted pirates will convert to paying customers, and the best-quoted report on the threat of file sharing comes from a company that stands to profit from scaring the hell out of publishers and authors.

Does it make financial sense to chase after hypothetical lost sales, using suspect data?

There are at least three current problems, and one looming problem, that I think are more deserving of our collective attention. I hope 2011 is the year everyone starts talking less about individual piracy and DRM, and more about what to do to reduce actual lost sales due to commercial usurpers and thieves.

The first is the problem of phantom sales, as illustrated last month when we found out that Dorchester was selling ebooks for titles whose rights had reverted. There’s still no clear news whether the primary culprit was Dorchester or the merchants Amazon and Barnes & Noble, or some other distribution middle-man. What is clear, however, is that until the story became public, none of the three commercial players had bothered to respond to the emails, letters, calls, and DMCA takedown notices sent by the affected authors and their agents.

Will the authors see any revenue from the copies that were sold during this period? Is Dorchester responsible, or the merchants? Why isn’t there a more efficient process by which merchants can request that publishers verify they hold the appropriate rights? Why were DMCA notices ignored? Getting answers to even some of these questions will help all future authors and publishers, and make the system less receptive to unauthorized sales.

The second is when thieves sell a writer’s content without permission or compensation. Last week we all enjoyed a dramatic, schadenfreude-laden story about this when it came to light that the regional publication Cooks Source has on multiple occasions published content from elsewhere without permission or compensation. When a recent victim complained, the editor responded (and I’m brutally but honestly paraphrasing here) that all online content from entities smaller and more anonymous than the one doing the appropriation is free.

But not all content theft comes with bullying or entitlement; it’s also enabled by obscurity. To be honest, I hesitated to even include this next example because it concerns erotica, but it’s exactly that unwillingness to talk about lowbrow subgenres in serious commercial terms that helps perpetuate the problem.

So here goes: There’s a particular author on the Kindle store successfully selling gay erotica collections. However, a June 2010 alert on the NSFW website Nifty Erotic Stories Archive states that this author “is publishing stories by Nifty authors on Amazon as his own.” Nifty then urges contributors to “please check if your story has been stolen and report it to Amazon.”

That notice went up at least four months ago; it’s now November, and the author’s titles are still for sale and doing reasonably well judging by sales rankings.

Have no rights holders complained? Is Amazon ignoring the complaints, as in the Dorchester story? Do the authors in question even know about the issue? (For all I know, it’s possible some authors aren’t aware that their stories ended up on Nifty in the first place, since it appears anyone with an email account can submit stories.) Or are they embarrassed to claim ownership, due to the subject matter?

As Slate pointed out last month, ebook erotica is a growing market, and that means commercial pirates are going to see more opportunities to exploit the work of authors who don’t defend themselves. The trouble is, if merchants and authors don’t take copyright infringement seriously even for lowbrow and subculture work, then such commercial piracy will continue to thrive.

The third problem is that the new gatekeepers–merchants and search engines–aren’t filtering out spammy “interloper” content from results pages, which means customers are being intercepted by piggy-back publishers selling inferior work.

Last week’s post from sci-fi author John Scalzi illustrates the problem. When you search for his name on Barnes & Noble, one of the top results is a $12 collection of Wikipedia articles. You can roll your eyes that there’s actually a customer out there dumb naive enough to pay for Wikipedia content, but the truth is that any customer who parts with $12 for Scalzi-related public domain content might have also been willing to hand over $12 for some authentic content from the author.

Merchants do not have much financial incentive to curb this sort of behavior, since they profit from either type of sale. (I dont know about Barnes & Noble, but Amazon’s current DTP pricing agreement explicitly states that you can opt into the 35% royalty rate for reselling content in the public domain.)

“For the time being, I see content mills as a bigger threat to my publishing business than piracy. I have faith that the majority of potential book buyers are honest… But I need for them to visit my website to have a chance at selling them a book. Google doesn’t seem to consider content mills and other spam sites as a threat to their business model, so they haven’t done anything to suppress their visibility.”

If there’s no realistic way to keep these interlopers out of the marketplace, then maybe we need to all start talking more seriously about strategies to “own” a brand or author name online and on retailers’ websites. Is there a keyword solution Scalzi can use to reclaim the top spot in searches for his name on B&N’s website? Do we need to find ways to intercept customers before they use a merchant’s search box, so that we can direct them to custom search results pages instead?

And finally, there’s the future problem of the Amazon behemoth. I think Amazon’s Kindle offering has been terrific for consumers and for publishing in general, but that’s not going to always be the case. There will come a day when Amazon the profit-seeking machine will put the screws to publishers and authors. After all, Amazon’s real customer is the deal-seeking consumer, and like Walmart it can and does use its control of the marketplace to create cost savings at the expense of manufacturers and suppliers. Even now, during this honeymoon phase where the retailer is offering great royalty percentages, selling through Amazon means relinquishing almost all of the customer relationship and data, which severely hobbles publishers’ own marketing and outreach options.

But so far, we’re all more interested in how to keep freeloaders from freeloading, and not talking about how to profitably exist without Amazon’s helping hand.

There are websites out there that are building thriving communities of readers, there are publishers selling DRM-free titles from their own sites, and there are always dozens of companies both big and small that are experimenting with micro-payment systems. But how will any small player compete against something like Amazon? If anything is going to gain enough critical mass to become a viable sales channel, it’s going to need the foresight and support of content creators working together.

We’ve mostly all bought into the myth that copyright exists mainly to benefit the artist and for the good of all mankind. It might be good to remember that it was created for business purposes, and it’s meant to protect companies from having their work seized by competitors.

The publishing industry seems to have only become more atomized as the digital revolution works its disruptive magic, and most of the chatter these days focuses on a problem that hasn’t yet been accurately measured or defined. If instead we could start working on these other more concrete problems, we might create real opportunities for authors and publishers to reach paying customers.

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1 Comment on Why DRM is a distraction

Doh! doh! doh! doh! doh! doh! The whole thing is a mess and unless SIMPLICTY is embraced the world will lose it’s wonderful legacy of BOOKS and literature. Monopolies, DRM, cloud reading, BAH HUMBUG! Piracy and illegal file sharing is a curse, but owning a book and being able to lend, exchange or even sell it is also enshrined in law in the ‘real’ world. Now, forget DRM and look for a single standard of selling while at the same time providing constant royalties for author and publisher. (Music and movies too). Let’s say I bought a book and loved it. I want my friends to read it… it’s a book lovers thing, to share. So I send it to a friend. (BAD!) But I’ve bought the book, downloaded it from my seller, and it’s been coded. When I have read it I can send it to a friend and the friend gets an email saying “You have been sent…if you want to accept this book the fee will be 10c….click here… If you would like to read the first chapter before accepting click here…” You can pay 10c to the publisher and also be directed to their site to purchase your books. let’s face it, someone has to pay the full $24.95 price for the first issue ‘cos it’s coded before they can send it on and that covers the folks (like me) who want a book as soon as Mr King releases it (or whomever). Profit all the way and “net bookexchanges” will grow, and people will buy new and second hand books, (or records, or movies) Just like in the real world. But of course I’m just dreaming.